Dear Sir,

We read several annual reports in a year and make notes for our reference. Going forward, we will be positing such notes for the benefit of the readers of our website.

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We are starting this of with Annual Report 2020 of Ultramarine and Pigments Ltd:

  • We have maintained revenue at the same level as compared to previous year, despite a slowdown in the economy and losing 2 weeks of crucial working days in March, 2020. We have earned Rs 318 Crores as total income in FY20.
  • The redeeming factor is that we were able to achieve a 4% growth in profit before tax (excluding exceptional item). Profit after tax went up by more than 10% as we opted for the lower tax regime for the current year. The overall performance of the Company has been good given the prevailing economic situation.
  • Total export sales for the year is Rs 94 Crores, maintained at same level as the previous year, amounting to a little less than a third of total sales
  • A wholly owned subsidiary Company namely; Ultramarine Specialty Chemicals Limited was incorporated on 9th December, 2019 vide CIN. U24300TN2019 PLC133064. The subsidiary Company was formed to set up a greenfield project at an estimated cost of Rs 51.20 crore to manufacture pigments at Naidupet, Nellore district in the state of Andhra Pradesh (AP). The Company is awaiting necessary statutory approvals from Government / local statutory authorities to start the project.
  • Pigment division:  The economic slowdown and a persistent liquidity problem in the retail market has resulted in a slackening of domestic demand. We witnessed a 10% decline in volume but we managed to limit the shortfall in value terms by 2%. This is mainly due to increased focus on selling value added products, enabled by the investments made in technology over the past two years. The Pigments division achieved a net revenue of Rs 98 crores in this financial year as compared to Rs 100 crores in the previous financial year.
  • We are also embarking upon an expansion of our Pigments division and plans are in place to implement the same through a 100% subsidiary at Naidupet. The company’s in house know-how and readily available technical man power will be handy in executing the project in a cost effective manner
  • Surfactants division:  We were able to maintain the same revenue as compared to previous year & achieved 100% capacity utilization. This year was very challenging due to wide fluctuations in raw material prices and forex. One of the key raw materials is 100% imported & maintaining a similar level of margin as that of previous year was very difficult.
  • Having achieved full production, the Company used a product mix strategy to avoid a major erosion in the margins. This division reported a revenue of Rs 164 crore as against Rs 167 crore for the previous year. 
  • The implementation of expansion project at Naidupet is at a crucial stage and we foresee a six-month delay in completing the project due to the lock-down and the subsequent return of migrant workers to their home states. The imported technology is on site, and once the business environment returns to normal, we can speed up the implementation. Commercial production is likely to commence during the fourth quarter of current financial year.
  • ITes Division:  During the year under review, this division reported an income of Rs 44 crores which was higher by 13% when compared to previous year figure of Rs 39 crores. This is mainly due to additional revenue from Data conversion and the division continues to diversify its service offerings to ensure sustainability and profitability
  • Outlook:  With a focus on improving yield of high value grades of pigments, the company is investing in R&D in all stages of the production process, from Raw Material procurement and processing to the final stages of value addition. We currently process 30% more of the high value grades than we did last year by volume, and 150% more than we did in 2016-17, entirely due to internal innovation
  • New products are being introduced in both the surfactants and the pigments divisions in a forward looking manner, and have been seeded in the domestic and exports market to better understand customer needs and applications. The company anticipates that they will become commercially viable over the next two years
  • Power consumption: Through various initiatives taken through both internal engineering and new technology, we achieved 17% electrical power reduction in Pigments operations. We achieved a range of 4%-20% reduction in power consumption in the basket of other chemicals made in our surfactants plants. 
  • Though we are operating multiple products and operations in a single stream of process, our Specific Energy (power and heat) consumption in the last two decades has reduced by 47%. This is largely as a result of two initiatives: benchmarking and improving the efficiencies of all power and heat consuming equipment in manufacture; and constantly changing the cost effective sources for power and energy by modifications and adoptions
  • Water consumption: All of our manufacturing products are highly water intensive and we operate from inland facilities with high level of water scarcity, hence managing the water supplies were the great challenges to our company. Through various initiatives we have reduced water need for some of our products up to 40% from the previous year through changes in downstream technology
  • Our water consumption has gone down by 60% in the last 25 years through various operational changes and technological upgradation. On an inland site and in a seriously water and energy deficit State, this is vital for us and for our neighbors in the area. But this remains a source of worry, as the water table in South India is fast depleting.
  • We remain a Zero Liquid Discharge (ZLD) company, in spite of multiple capacity enhancement through product mix changes and alternate environmental friendly products, operating with many plants and products. Water consumption is constantly reduced, and all waste waters are treated through effective effluent treatment plants for recovering in-organic chemicals which are then converted to intermediate products in detergent manufacturing
  • Disclosure of Commodity Price risks: Company’s business activities inter-alia include import of materials like Alpha Olefin(AO), Lauryl Ethoxylated Oxide (LEO) etc., Capital Equipment like Machinery for drying purposes, & Export of Pigments /Sulphonated products which are linked to international prices and major international currencies.
  • Balance Sheet – 40-45 crore in fixed assets addition in the form of net fixed assets (60 crore investment in last 2 years) and CWIP…around 20 crore loan taken
  • 20% stake in Thirumalai worth around 100 crore
  • Mutual fund investments – ~33 crore
  • Cash and equivalents – ~ 20 crore 


Disclosure: This is neither a research report or a recommendation on the stock. I don’t have any investment in the stock.


Best Regards,

Ekansh Mittal
Research Analyst
Ph.: +91-727-5050062, Mob: +91-9818866676
Email: [email protected]


Research Analyst Details

Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

Analyst ownership of the stock: No

Details of Associates: Not Applicable

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